Arizona: Termite inspections are conducted at the visible and accesable areas of properties only. If it's in a wall void where the drywall would have to be removed, it's not going to be inspected. Probing tools like a centerpunch might be used to jab wood and check for damage. Mirrors are used to look around corners. Moisture meters can be helpful in detecting areas likely to be attacked by termites. Mud tubes or pellets are a good indicator. Carton nests bulging walls or cielings are easy to find once the termites have been there a while. If I found termite damage in a house, I would report the damage. If I found no live termites I would report that too. Unless you prove that those termites were treated by a professional, it is only safe to assume they were not. If I was buying a house with termite damage and you couldn't prove to me they were treated and that the home was still under warranty, I'd make you treat them too. $1200 seems very reasonable. I've sold big, bad jobs for $7000. Also, people who do remodeling don't know their ____ from a hole in the ground when it comes to termites. Don't listen to them. If you want to sell the house, pay the money. Have it taken out of escrow. By the way, if you have Sears, Home Depot, Lowes or Joe Blow the Cabinet Guy do an inspection for you, I've got a bridge you can buy and some beach-front property here in Arizona you might be interested in.